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Sun Hydraulics

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Sun Hydraulics: Leading in Tough Times

Case Study

Executive Summary Sun Hydraulics, an industry leader of hydraulic valves and manifolds, has seen steady growth over the past eight years. It has been a profitable company throughout the years with varying return on sales. Presently Sun is constrained by declining sales and high labor costs heading into the present recession. The horizontal corporate structure has proven ineffective in ridding itself of low performing employees that are weighing down the company and thus decreasing profitability. It is time for Allen Carlson, president and CEO of Sun Hydraulics Corporation, to address the employees and shareholders of his decision on how Sun plans to deal with labor and profits during these tough times. I recommend that Sun Hydraulics should proceed with layoffs and early retirement plans to effectively and immediately reduce labor costs during the present recession. This approach seen by some as a short-term solution, allows Sun to rid itself of low performers that the present corporate structure has failed to do. Not only will it increase overall moral over time, but also these layoffs will allow current employees to contribute more time towards future growth and less time coaching or babysitting present employees that may be unhappy or underperforming.

Organizational Profile/Overview

Bob Koski along with another engineer established Sun Hydraulics, describe as the BMW in the Hydraulics Industry, in 1970. The basis for his vision was to create a self-managed company that could grow steadily over time focused on projects driven by demand. The core of Sun Hydraulics business was to provide high-performance hydraulic cartridge valves and manifolds for use by manufacturers of mobile and industrial products. They offer premium products within the motion-control industry offering a full range of

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